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Hyper-V is “Type 1″ Hypervisor whereas Virtual Server is a “Type 2″ Hypervisor. What that means is that Hyper-V is running directly against the physical hardware and is handling the scheduling of the Virtual Machines whereas Virtual Server is an application that is scheduled by the Windows OS running underneath it just like any other application. Hyper-V will give you better performance and more scalabilty as well as enabling technologies like Live Migration (that ability to move a running virtual machine from one system to another without downtime to the applications). ::

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